Nadia Morgan also known as Nadia Nikoloff v ST. George Bank - a Division of Westpac Banking Corporation - [2022] WASCA 17

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT :   THE COURT OF APPEAL (WA)
CITATION:   NADIA MORGAN also known as NADIA NIKOLOFF -v- ST. GEORGE BANK - A DIVISION OF WESTPAC BANKING CORPORATION [2022] WASCA 17
CORAM:   QUINLAN CJ
MITCHELL JA
VAUGHAN JA

HEARD:   1 FEBRUARY 2022
DELIVERED          :   17 FEBRUARY 2022
FILE NO/S:   CACV 110 of 2020
BETWEEN:   NADIA MORGAN also known as NADIA NIKOLOFF
Appellant
AND
ST. GEORGE BANK - A DIVISION OF WESTPAC BANKING CORPORATION
Respondent

ON APPEAL FROM:
Jurisdiction              :   SUPREME COURT OF WESTERN AUSTRALIA
Coram:   MASTER SANDERSON
Citation: ST GEORGE BANK - A DIVISION OF WESTPAC BANKING CORPORATION -v- NADIA MORGAN also known as NADIA NIKOLOFF [2020] WASC 342
File Number            :   CIV 2159 of 2017

Catchwords:

Banking and finance - Mortgagee recovery action - Whether summary judgment properly awarded to lender - Whether provision for interest rate variation was arguably void for uncertainty on the basis that it conferred an unfettered discretion to vary rates

Legislation:

Rules of the Supreme Court 1971 (WA), O 14 r 12

Result:

Application for leave to adduce additional evidence in an appeal refused
Appeal allowed

Category: B

Representation:

Counsel:

Appellant	:	In person
Respondent	:	C L Donald

Solicitors:

Appellant	:	In person
Respondent	:	Lavan

Case(s) referred to in decision(s):

Cross v National Australia Bank Ltd (Unreported, FCA, 29 April 1994) (Drummond J)
Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40-950
Nikoloff v Perpetual Trustee Company Ltd [No 2] [2022] WASCA 16
Perpetual Nominees Ltd v Parist Holdings Pty Ltd [2005] NSWSC 1345
Saunders v The Public Trustee [2015] WASCA 203
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76; (2017) 55 WAR 36
Sovereign Grange Pty Ltd v AV Truck Services Pty Ltd [No 2] [2017] WASCA 142
St George Bank - A division of Westpac Banking Corporation v Morgan [2020] WASC 342

JUDGMENT OF THE COURT:

Overview

The appellant, Nadia Morgan (also known as Nadia Nikoloff), appeals against a decision of Master Sanderson[1] dismissing an application to set aside summary judgment.
[1] St George Bank - A division of Westpac Banking Corporation v Morgan [2020] WASC 342 (primary reasons).
Summary judgment was entered on 21 August 2018. The judgment was in respect of a mortgage recovery action for properties in Queens Park, Western Australia. The master ordered that Ms Morgan give possession of the properties to the respondent Bank within 28 days. There was no judgment for a monetary amount. Indeed, the respondent Bank made no claim for a monetary amount.
For the reasons that follow the appeal should be allowed. The loan agreement between Ms Morgan and the respondent Bank is arguably void for uncertainty on the basis that it gave the respondent an unfettered right to change the applicable interest rate at any time. There is a real question to be tried both as to whether, on its proper construction, the loan agreement confers an unfettered discretion to change the interest rate and as to whether the loan agreement is invalid if an unfettered discretion is conferred. This is not one of the clearest of cases, where there is a high degree of certainty about the outcome, in which summary judgment can properly be granted.
The respondent did not seek to resist the appeal against the refusal to set aside summary judgment on the basis that Ms Morgan failed to give adequate explanation for her absence at the hearing of the summary judgment application. Nor did the respondent contend that the master's decision should be upheld by reason of Ms Morgan's delay in applying to set aside summary judgment. As we have concluded that Ms Morgan should have been given leave to defend had she appeared at the hearing of the summary judgment application, the appeal must be allowed.

Background facts

The respondent Bank is the statutory successor to St George Bank Ltd (St George).[2] On 11 March 2003 Ms Morgan entered into a 'Portfolio Loan agreement' with St George. This was varied on 6 January 2005 to provide for a credit facility in the amount of $1 million. There is uncontradicted affidavit evidence that St George advanced and made available the $1 million loan amount to Ms Morgan.[3]
[2] For ease of reference in what follows references to 'the respondent' or 'the respondent Bank' include
[3] Affidavit of S G Reece affirmed 2 July 2018 par 7.
The loan agreement, and the money advanced under it, was secured by first registered mortgages over various properties owned by Ms Morgan. These included the Queens Park properties.
The respondent Bank alleges that, as of 25 August 2016, Ms Morgan failed to pay $23,527.06 when due such that Ms Morgan was in default under the loan agreement and the mortgages. The respondent Bank served Ms Morgan with a notice of default dated 26 August 2016 on 29 August 2016. The default notice relied on the alleged $23,527.06 in arrears and required payment by no later than 3 October 2016 failing which the total amount outstanding under the loan agreement would become due and payable - an amount claimed to be $1,327,527.06.
Ms Morgan did not rectify the alleged default.
A writ seeking possession of the properties was issued on 12 July 2017. The respondent Bank issued a chamber summons for summary judgment on 6 August 2018. Ms Morgan did not appear at the hearing of the summary judgment application. The master granted leave to bring the application (leave being necessary as the application was out of time) and entered judgment for possession of the Queens Park properties on 21 August 2018.
Before the respondent Bank applied for summary judgment, Ms Morgan filed and served a defence. Among other things the defence as filed alleged that:
1.The loan agreement was invalid as 'St George merely monetised the loan agreement creating credit on account' through bookkeeping entries (pars 5, 11).
2.There was a 'problem of securitisation' (par 7).
3.As there was no contract, no interest was due (par 9).
4.In any event, based on Ms Morgan's interest calculations, she was not in default under the loan agreement (pars 9, 10, 11).
5.The respondent Bank had unconscionably inflated the interest rate being charged (par 11).
6.The respondent Bank had suffered no loss (par 11).
As to interest, among other things the defence stated:
When I signed the loan agreement it was under the belief the banks vary the interest rate in relation to the RBA cash rate which reflects the economy; I at no time believed I was signing an open contract that allowed the bank to charge me whatever interest they wanted at their discretion - how does that give me any certainty - indeed how is the contract valid? One of the six elements of a contract is certainty.
On 6 July 2020 Ms Morgan applied pursuant to O 14 r 12 of the Rules of the Supreme Court 1971 (WA) to set aside the order for summary judgment.

The primary decision

Order 14 r 12 RSC provides:
Any judgment given against a party who does not appear at the hearing of an application under rule 1 or rule 6 may be set aside or varied by the Court on such terms as it thinks just.
Three questions usually arise on an application to set aside summary judgment under O 14 r 12 RSC:
1.First, has the defendant given a satisfactory explanation for his or her absence at the hearing?
2.Second, has the defendant given a satisfactory explanation for any delay in applying to set aside the judgment?
3.Third, would the defendant have been given leave to defend had he or she appeared at the hearing?
In dismissing the application to set aside the summary judgment the master, in effect, answered the third question adversely to Ms Morgan. The master held that there was no substance in the grounds of defence he identified as having been relied on.[4] The master did not consider whether there was a satisfactory explanation for Ms Morgan's absence at the 21 August 2018 hearing. Nor did the master consider whether the near two-year delay in applying to set aside the summary judgment was satisfactorily explained. There is, however, no notice of contention which seeks to rely on these matters to justify the order dismissing the application to set aside the summary judgment. Accordingly, the appeal is confined to whether there is appellable error in the master's conclusion that Ms Morgan would not have been given leave to defend had she appeared at the hearing.
[4] Primary reasons [9].
In coming to that conclusion, the master mentioned that Ms Morgan had filed ten affidavits. The master said, however, that it was difficult to ascertain the basis on which Ms Morgan made the application from the affidavits. Instead, the master referred to Ms Morgan's defence dated 12 March 2018 from which he identified three matters raised by way of defence.[5]
[5] Primary reasons [3] - [4].
Those three matters, and the master's rejection of them as matters establishing a real question to be tried, were as follows:
1.Ms Morgan said that the loan agreement was not valid and alleged that there was a 'securitisation problem' - the master said that there was nothing to suggest that the loan agreement was in any way invalid.[6]
2.Ms Morgan said that the respondent Bank did not loan its own money or assets, but rather funds it may have borrowed from another institution - the master identified that the respondent Bank's affidavits proved the loan, as secured by the mortgages, and the default, meaning that Ms Morgan was liable to repay the respondent. Accordingly, on the face of it, the respondent Bank was entitled to possession of the properties securing the loan.[7]
3.Ms Morgan made a complaint as to the interest rate charged by the respondent Bank - the master characterised the complaint as being that 'interest rates were falling at the time default notices were issued but the [respondent] did not reflect both the falling interest rates and deteriorating economic conditions in demanding repayment of the loan'. The master said that this did not provide any basis for defending the action.[8]
[6] Primary reasons [7].
[7] Primary reasons [5].
[8] Primary reasons [8].

Grounds of appeal and application to adduce additional evidence

Ms Morgan's grounds of appeal are as follows:
IThe Master overlooked some of my relevant points. On page 4, point 5 continued, he states 'the fact is, the defendant entered into a loan agreement with St George Bank'.
Error in law.
IIThe Master in point 8, page 4, did not take into account my arguments in relation to the interest rate and its relevance to this case, preferring to take the narrow view that the contract was signed and I am in default because the bank provided copies of the loan agreement and mortgage and copies of the relevant default notices; which lead [sic] to a miscarriage of justice.
Error in law
IIIMaster Sanderson did not take into account factors, that were raised in my affidavits:
i.Uncertainty of contract
ii.Implied duty of good faith
iiiUnfair terms
ivUnconscionable Conduct
vMisrepresentation
viDuress
Error in law
Ms Morgan organised her written submissions under headings of 'Loan Agreement', 'Interest Rates', 'Uncertainty of Contract', 'Implied Duty of Good Faith', 'Unfair Terms', 'Unconscientious Conduct', 'Misrepresentation' and 'Duress/Economic Duress'. The first two headings address grounds 1 and 2. The remaining headings address the sub-grounds within ground 3.
By an application in an appeal dated 11 March 2021 Ms Morgan applied to adduce additional evidence in the appeal. Ms Morgan sought to rely on an affidavit sworn 10 March 2021. The affidavit attached various documents including an extract from a paper published by the Commonwealth Parliament, an extract from an article entitled 'Real Estate Success - Introduction to Investment Finance', Perth and national house price data and a Landgate sales report.
The principles relevant to the grant of leave to admit additional evidence in an appeal against a final decision made after trial were outlined in Saunders v The Public Trustee.[9] In the context of an appeal from an interlocutory decision the consideration of finality applies with less force.[10] We would dismiss the application to adduce additional evidence in the appeal even though the application was not opposed by the respondent Bank. There are two reasons why it is not in the interests of justice to admit the additional evidence. First, the additional evidence is not properly characterised as fresh evidence; it could, with reasonable diligence, have been adduced by Ms Morgan on the application before the master. Second, having considered the evidence, there is no significant possibility that the evidence would lead to a different result if admitted.
[9] Saunders v The Public Trustee [2015] WASCA 203 [84] - [90].
[10] Sovereign Grange Pty Ltd v AV Truck Services Pty Ltd [No 2] [2017] WASCA 142 [44] - [47].

Disposition

Several of Ms Morgan's grounds of appeal are misconceived. For example, as to ground 1, the affidavit evidence establishes conclusively that Ms Morgan entered into a loan agreement with St George. It is correct that, in relation to grounds 3(ii) - (vi), the master's reasons did not address defences relying on an implied duty of good faith, unfair terms, unconscionable conduct, misrepresentation or duress. However, those matters were not raised in Ms Morgan's pleaded defence. To the extent that these types of defence were adverted to in Ms Morgan's numerous affidavits the matters raised went no higher than to state general principles of law without identifying factual material that arguably engaged the principles. Put shortly, there was no proper evidentiary basis for the possible application of such defences. Grounds 1 and 3(ii) - (vi) must be dismissed.
By contrast, grounds 2 and 3(i) are of substance and require more detailed consideration.
At the outset it should be acknowledged that Ms Morgan's affidavits are not ideal. This is, unfortunately, one of those cases in which (no doubt as a consequence of the litigant being unrepresented) what is potentially a good point has been obscured by it having been buried in a morass of misconceived complaints. Nevertheless, as can be seen from the portion of Ms Morgan's defence reproduced at [11] above, Ms Morgan raised before the master whether the loan agreement lacked certainty to the extent that it allowed the respondent Bank to vary the interest rate charged at its discretion. As well as appearing in the defence the point is also discernible from Ms Morgan's affidavits.[11]
[11] See Affidavit of N Morgan sworn 5 September 2018 (entitled 'In Defence of Application for Summary Judgment') pars 1 - 3, 11 GAB 390 - 391; Further affidavit of N Morgan sworn 5 September 2018 (entitled 'In Defence of Application for Summary Judgment') par 13 GAB 415; Affidavit of N Morgan sworn 19 March 2020 (entitled 'Summary Judgment') par 1 GAB 419 - 420; Affidavit of N Morgan sworn 18 June 2020 (entitled 'Clarification') pars 1, 23, 24(e) - (f) GAB 423, 426 - 427; Affidavit of N Morgan sworn 27 August 2020 (entitled 'Evidence') pars 2(a), 3 (dot points 3, 6, 7), 5, 17 GAB 436, 439 - 442, 454.
In this court, counsel for the respondent Bank accepted, quite properly, that the uncertainty point as to the interest rate was raised before the master.[12]
[12] Appeal ts 8.
The uncertainty point is, in substance, the gravamen of grounds 2 and 3(i). Ms Morgan is to be understood to contend that the master erred in law in failing to find that the loan agreement was, or was arguably, void to the extent that it permitted the respondent Bank to vary the interest rate charged to Ms Morgan at its unfettered discretion.
The offer to the loan agreement (as eventually signed by Ms Morgan) provides as follows in relation to the 'annual percentage rate':[13]

[13] Affidavit of S G Reece affirmed 2 July 2018 attachment 'SGR-2' GAB 18.

The notation 'N/A' (self-evidently meaning 'not applicable') as to the 'Negotiated Variable Rate period (months)' creates some difficulty in reading and construing the description of the 'annual percentage rate'. There is in fact no agreed negotiated variable rate period. As such, the final three paragraphs of the description of the 'annual percentage rate' are placed on a false foundation. In argument counsel for the respondent Bank submitted that, properly construed, Ms Morgan was to be charged as her 'annual percentage rate' an amount that was 0.70% less than the 'Portfolio Loan variable rate' - the Portfolio Loan variable rate being a general rate charged by the respondent from time to time to all customers with this particular product (ie a 'Portfolio Loan' as described on the cover of the offer to the loan agreement). On the construction advanced by counsel for the respondent the 0.70% differential was to commence from the start of the loan under the loan agreement and was to continue for the lifetime of the loan agreement.[14]
[14] Appeal ts 9 - 13, 21.
There is, however, a note to the offer which identifies that certain elements of the information above (the annual percentage rate appearing above) may be changed without Ms Morgan's consent. This expressly includes the 'annual percentage rate', the name or description of any reference rate and any applicable margin.[15]
[15] Affidavit of S G Reece affirmed 2 July 2018 attachment 'SGR-2' GAB 20.
Ms Morgan's argument in support of grounds 2 and 3(i) relied heavily on the note.[16]
[16] Appeal ts 3 - 4, 6 - 7.
The 'default rate' under the loan agreement is the annual percentage rate plus a margin of 3% per annum - meaning that as at the disclosure date for the offer the default rate was 8.970% per annum.[17]
[17] Affidavit of S G Reece affirmed 2 July 2018 attachment 'SGR-2' GAB 21.
A box above the place for Ms Morgan to sign the offer reads:

Again, in this respect, the offer identifies the potential for Ms Morgan's counterparty to vary the annual percentage rate without her consent. That appears from the fourth dot point under the right-hand column 'Things You Must Know'.
The loan agreement is subject to general terms and conditions described as the 'Portfolio Loan Agreement - General Terms and Conditions'.[18] These contain, at cl 28, a definition of 'annual percentage rate' as meaning 'a per annum rate of interest'.[19] Clause 5 of the general terms and conditions deals with interest charges and default interest charges.[20] In terms of interest the agreement provides for a daily accrual method, debited monthly.
[18] Affidavit of S G Reece affirmed 2 July 2018 attachment 'SGR-2' GAB 29 - 50.
[19] Affidavit of S G Reece affirmed 2 July 2018 attachment 'SGR-2' GAB 45.
[20] Affidavit of S G Reece affirmed 2 July 2018 attachment 'SGR-2' GAB 35 - 36.
Clause 6 of the general terms and conditions is entitled 'Interest rate options'. Among other things it states:
We call the interest rate (except the default rate) applying to the loan facility, the 'annual percentage rate'. The annual percentage rate at the disclosure date for the interest rate option for each sub-account is also shown in the Offer [as to which see [27] above].
Variable rate option
Whenever a sub-account is under the variable rate option:
(a)we can change the annual percentage rate at any time;
(b)the annual percentage rate shown in the Offer is only a guide. The actual annual percentage rate applying at the settlement date may have changed;
(c)we will tell you of a change in the annual percentage rate no later than the day it takes effect by writing to you or by press advertisement.[21] (defined terms italicised)
[21] Affidavit of S G Reece affirmed 2 July 2018 attachment 'SGR-2' GAB 36.
According to the respondent Bank, based on these provisions, the express terms of the loan agreement - which were plainly accepted by Ms Morgan - provide for changes to the variable interest rate and notification of such changes by the respondent from time to time.[22]
[22] Respondent's submissions par 22 WAB 33.

It is apparent that the respondent Bank did change the annual percentage rate from time to time. One of the respondent's affidavits included bank statements from 1 November 2009 to 31 January 2018.[23] The interest rate as of 6 November 2009 was 5.69%.[24] On 8 December 2009 it changed to 6.08%.[25] The interest rate remained over 5.97% - going as high as 7.20% - in the period to 17 December 2012.[26] At all times the default rate was 3% above the annual percentage rate. Ms Morgan also asserted that the annual percentage rate charged by the respondent Bank between 30 November 2003 and 31 January 2009 varied between 6.22% and 9.07% but at all times exceeded 5.97%.[27]
[23] Affidavit of S G Reece affirmed 2 July 2018 attachment 'SGR-4' GAB 69 - 379.
[24] Affidavit of S G Reece affirmed 2 July 2018 attachment 'SGR-4' GAB 377.
[25] Affidavit of S G Reece affirmed 2 July 2018 attachment 'SGR-4' GAB 374.
[26] Affidavit of S G Reece affirmed 2 July 2018 attachment 'SGR-4' GAB 266.
[27] Affidavit of N Morgan sworn 5 September 2018 (entitled 'In Defence of Application for Summary Judgment') attachment 1 GAB 394 - 397.
On appeal Ms Morgan highlighted the interest charged by the respondent Bank. Ms Morgan said there had been no justification of the interest calculations; nor was there objective substantiation in respect of the interest rate movements. Ms Morgan was critical of the circumstance that the respondent Bank increased the interest rate immediately whenever the Reserve Bank of Australia (RBA) increased its cash rate but did not take like steps when there was a decrease in the cash rate. Ms Morgan said that the provisions of the loan agreement reproduced at [27] - [35] above gave the respondent Bank the power to do what it liked without consequences, ie the respondent had an unfettered discretion. Ms Morgan observed that there was no objective formula or statement providing for when an interest rate change might occur and, if there was to be a change, the amount of the change (either by way of increase or decrease).
Ms Morgan relied on the principles in the decisions of Kabwand Pty Ltd v National Australia Bank Ltd,[28] Cross v National Australia Bank Ltd[29] and Perpetual Nominees Ltd v Parist Holdings Pty Ltd.[30] Her contention was that, consistent with those principles, the provisions allowing the respondent Bank to change the interest rate to be charged invalidated the loan agreement for uncertainty. Ms Morgan said that the loan contract lacked any objective parameters as to when the interest rate might be changed and, when changed, in what amount.[31]
[28] Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40-950.
[29] Cross v National Australia Bank Ltd (Unreported, FCA, 29 April 1994) (Drummond J).
[30] Perpetual Nominees Ltd v Parist Holdings Pty Ltd [2005] NSWSC 1345.
[31] Appeal ts 2 - 4, 6 - 8.
Counsel for the respondent Bank accepted, for the purpose of the summary judgment application, that a contractual provision giving a lender an unfettered power to change the interest rate in respect of a loan without constraint or reference criteria was arguably void for uncertainty.[32] That concession should be accepted. The relevant authorities are collected in the decision of Nikoloff v Perpetual Trustee Company Ltd[33] - a decision also involving Ms Morgan which was heard at the same time as this matter. However, while acknowledging the argument advanced by Ms Morgan, the respondent Bank contended that the interest rate provision was not uncertain - or even arguably uncertain - and the summary judgment as granted by the master ought to be sustained.[34]
[32] Appeal ts 18.
[33] Nikoloff v Perpetual Trustee Company Ltd [No 2] [2022] WASCA 16 [26] - [33].
[34] Appeal ts 8 - 9.
The respondent Bank argued that, properly construed, the interest rate provision was not void. It was said to be clear, beyond argument for the purpose of a summary judgment application, that the respondent did not have an unfettered power to vary the interest rate. Rather, according to the respondent Bank, its power to vary was only to vary the Portfolio Loan variable rate - and, that Portfolio Loan variable rate being a general interest rate applying to all the respondent's customers with a Portfolio Loan product such as Ms Morgan, there was an objective market standard to be applied at all times, meaning that the clause could not be void for uncertainty.[35]
[35] Appeal ts 9 - 14, 16, 18 - 19.
More particularly, the respondent Bank contended that the power, in cl 6(a) of the general terms and conditions, to change the annual percentage rate at any time was no more than a power to change the Portfolio Loan variable rate with a consequential change to the annual percentage rate by reason of the circumstance that the annual percentage rate was to be 0.70% less than the Portfolio Loan variable rate. Counsel for the respondent Bank relied on the final paragraph of the description of the 'annual percentage rate' (as reproduced at [27] above) where the annual percentage rate was equated to the Portfolio Loan variable rate. It was stated that, by reason of the description of the annual percentage rate in the offer document, the annual percentage rate charged to Ms Morgan had to be 0.70% less than the Portfolio Loan variable rate.[36]
[36] Appeal ts 10, 13.
We are prepared to assume, for the purpose of evaluating the respondent Bank's argument, that the Portfolio Loan variable rate is a general rate of interest charged to the respondent's customers who hold a Portfolio Loan product. While there is no direct evidence on that point, there is some support for the contention in the offer to the loan agreement and the general terms and conditions. For example, cl 6 of the general terms and conditions states that information on the current Portfolio Loan variable rate and other interest rates is available from Ms Morgan's nearest branch. But this only goes part of the way to establish the respondent Bank's answer to the uncertainty point. The more problematic aspect of the respondent's contention is the suggestion that cl 6(a)'s power to change the 'annual percentage rate' at any time is to be read and construed as a power to change the 'Portfolio Loan variable rate' at any time.
In its terms the text of cl 6(a) empowers the respondent Bank to change the annual percentage rate - a rate peculiar to Ms Morgan and her loan under the loan agreement - rather than a general rate of interest in the form of the Portfolio Loan variable rate charged to customers of the respondent with a Portfolio Loan product.
It is not necessary to finally determine the proper construction of cl 6(a) of the general terms and conditions. For present purposes it suffices to conclude, as we do, that there is not a high degree of certainty that, properly construed, cl 6(a) confers a power to change the Portfolio Loan variable rate rather than the annual percentage rate. For it is only in the clearest of cases, where there is a high degree of certainty about the outcome if the proceedings were allowed to go to trial, that summary judgment ought properly to be granted. It must be clear that there is no real question to be tried.
It cannot be concluded that there is no real question to be tried as to the respondent Bank's preferred construction of its power to change the interest rate charged under Ms Morgan's loan agreement. It may be accepted that the text of cl 6(a) is not the only possible consideration. The text must be considered in context having regard to the purpose of the provision. Different considerations may inform the question when all available material is before the court. At the moment, however, simply employing a textual analysis of the offer to the loan agreement and cl 6(a) of the general terms and conditions, in the context of the loan agreement as a whole, the words of cl 6(a) provide limited support for the respondent Bank's construction. Clause 6(a) is directed, in its terms, to the annual percentage rate rather than the Portfolio Loan variable rate. We accept that the description of the annual percentage rate in the offer to the loan agreement describes the annual percentage rate by reference to Portfolio Loan variable rate. But, consistently with the notes referred to at [29] and [32] above, it is the annual percentage rate that may be changed by the respondent Bank at its discretion. On the face of cl 6(a) that clause would, at least arguably, allow the respondent Bank to change the annual percentage rate irrespective of and unrestrained by any change in the Portfolio Loan variable rate.
So understood there is a real question to be tried as to whether the respondent Bank enjoys an unfettered discretion to change the interest rate charged to Ms Morgan from time to time without constraint or objective reference criteria - the power not being constrained by reference to the respondent's own reference rates - such that cl 6(a) of the general terms and conditions is arguably void. Grounds 2 and 3(i) should be upheld.
This conclusion should have been determinative of the respondent Bank's application for summary judgment. So far as cl 6's interest rate change power is arguably void the court could not be satisfied with a high degree of certainty that Ms Morgan was in default on 25 August 2016 with arrears of $23,527.06. To the extent that the respondent Bank arguably overcharged interest by raising the rate above 5.97% Ms Morgan may have overpaid the respondent and be entitled to a credit. It is for the respondent Bank to show that even considering such an arguable credit there was a subsisting default as of 25 August 2016. This is not possible on the papers filed in support of the summary judgment application. There is a real question to be tried as to whether Ms Morgan was in default as claimed in the statement of claim so as to justify the whole of the loan amount becoming payable following the non-satisfaction of the default notice.

Conclusion and orders

The respondent Bank accepted that the appeal must be allowed, and the summary judgment set aside, if the court concluded that Ms Morgan had an arguable defence to the effect that the provision allowing the respondent to change the interest rate was void for uncertainty.[37] For the reasons set out above we are satisfied that there is such an arguable defence. Accordingly, we would allow the appeal. As the appeal is in respect of the orders made 8 October 2020 we would set aside those orders and in substitution for them make orders setting aside the order for possession made 21 August 2018.
[37] Appeal ts 21 - 22.
A question arises as to whether Ms Morgan should have unconditional leave to defend. The general rule is that if there is a fair issue to be tried, the defendant should have unconditional leave to defend, although the court has a discretion to impose conditions.[38] In addition to the court's power to impose conditions under O 14 r 4(3) RSC it should be remembered that the relevant application was brought under O 14 r 12 RSC. This permits the court to set aside or vary a summary judgment on such terms as the court thinks just. In this way O 14 r 12 RSC provides another basis on which the court may, if considered just, set aside a summary judgment, permitting a defendant to defend a claim, but do so subject to conditions.
[38] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76; (2017) 55 WAR 36 [168].
At the appeal hearing counsel for the respondent Bank made no submissions as to whether, if the appeal was allowed and the summary judgment was set aside, there should be any conditions imposed in granting Ms Morgan leave to defend.[39] On delivery of these reasons the court should hear from the parties as to whether Ms Morgan should have unconditional leave to defend; and, if not, what conditions ought to be imposed on leave to defend.
[39] Appeal ts 22.
The court should also hear from the parties on all questions concerning the costs of the applications before the master and the costs of the appeal.
Accordingly, subject to any necessary further orders as to unconditional or conditional leave to defend and costs, we would order that:
1.The appellant's application in an appeal dated 11 March 2021 is dismissed.
2.The appeal is allowed.
3.The orders of the Supreme Court of Western Australia made 8 October 2020 in action CIV/2159/2017 are set aside and in substitution thereof there are orders that:
1.Pursuant to O 14 r 12 of the Rules of the Supreme Court 1971 (WA) pars 2 and 3 of the orders of the Supreme Court of Western Australia made 21 August 2018 in action CIV/2159/2017 are set aside.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AT
Associate to the Honourable Justice Vaughan
17 FEBRUARY 2022

St George Bank where the context permits; for example, in relation to entry into the loan agreement and mortgages in March 2003 as varied in January 2005 before Westpac Banking Corporation became the statutory successor to St George Bank.